MERCOSUR (Scenario)
Bravo Luggage Company is a Latin American firm based in Buenos Aires, Argentina. Bravo has seen a sharp increase in orders over the last few months and needs to increase the amount of material imported from other countries. Currently, the materials used to manufacture Bravo luggage come from suppliers in Paraguay. Bravo managers have been approached by suppliers from Mexico and China who are both offering very competitive prices on materials.
-Which of the following statements best supports using a supplier from Paraguay over a supplier from Mexico or China?
A) Material sourced from Paraguay is of better quality compared to the ones sourced from Mexico or China.
B) Material sourced from Paraguay is more durable compared to the ones sourced from Mexico or China.
C) As a member of a trade bloc, it is expected that Bravo resort to trade diversion, even if Mexico and China provide better materials at lower costs.
D) Bravo could avoid tariffs because Paraguay is a member of MERCOSUR.
Correct Answer:
Verified
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